Federated Farmers: Still gloomy down on the farm

Federated Farmers vice-president Andrew Hoggard - farmer confidence is heading south.

Farmers remain gloomy about the general economic outlook according to Federated Farmers' mid-season farm confidence survey, conducted in January, which also showed growing concern about recruiting able staff.

"The survey found the lowest level of confidence in the economy since July 2009, when we were just emerging from the Global Financial crisis," vice-president Andrew Hoggard said.

"As with the wider business community, I think we're seeing concern about the impact of global uncertainty and instability on our key export markets, with the likes of Brexit and US-China trade relations."

Just 5.1 per cent of farmer respondents expected general economic conditions to improve over the next 12 months, while 45.9 per cent expected they would worsen. The level of pessimism is a fivefold increase on the July 2017 survey.

Continuing difficulty recruiting staff also stood out, with 40.1 per cent of respondents finding it harder over the past six months to recruit skilled and motivated staff , up 4.2 points on July 2018.

"While that might reflect seasonal factors, it's also driven by the generally tight labour market and immigration restrictions," Mr Hoggard said.

"Dairy and arable farmers have found staff recruitment particularly hard.

"This indicator has steadily worsened over the 10-year life of the survey, and is at a record level of difficulty."

Meanwhile 56 per cent of the 1462 respondents said they were currently making a profit, down from 62.3 per cent in July 2018; 9.3 per cent were making a loss, up from 7.8 per cent, and 32.4 per cent were just breaking even, up from 27.8 per cent.

Meat and wool farmers continued to be the most positive about their current profitability, and their sentiment improved a little since July. But dairy worsened, which did not surprise Mr Hoggard given the fall in dairy commodity prices and farmgate milk price forecasts in the second half of last year.

Almost 30 per cent of respondents expected farm profitability would worsen over the coming year while 18 per cent expected improvement, a 21.8 per cent fall on July's 10.4 per cent nett positive score.

Optimism about future farm production had fallen over the past six months, particularly in dairy and arable farms.

The survey also found that overall farmers, especially meat and wool, expected to spend slightly more over the next 12 months, but in most regions expected debt levels to increase.

Regulation and compliance costs remained the greatest concern.

Concerns about climate change policy and the ETS, which became increasingly prevalent over the past three surveys, had levelled out, and concern about the political situation has also decreased.

Drought did not register as a concern, which was "most unusual" for a January survey.